What is Pension Fund Regulatory and Development Authority (PFRDA)?

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What is Pension Fund Regulatory and Development Authority (PFRDA)? Blog Image


Pension fund regulator PFRDA recently allowed National Pension System (NPS) subscribers to deposit their contributions directly under the D-Remit process through the Unified Payments Interface (UPI) QR code.

About Pension Fund Regulatory and Development Authority (PFRDA)

  • It is a statutory regulatory body set up under the PFRDA Act enacted in 2014.
  • Objective: To promote old age income security by establishing, developing, and regulating pension funds and to protect the interests of subscribers to schemes of pension funds and related matters.
  • It comes under the jurisdiction of the Ministry of Finance.
  • PFRDA is headquartered in New Delhi, with regional offices located around the country.
  • Composition: It consists of a Chairperson and not more than six members, of whom at least three shall be whole-time members, to be appointed by the Central Government.
  • Functions:
    • Regulate National Pension System (NPS) and other pension schemes to which the PFRDA Act applies;
    • Undertaking steps to educate subscribers and the general public on issues relating to pensions, retirement savings, and related issues, and training intermediaries.
    • Providing pension schemes not regulated by any other enactment;
    • Protecting the interests of subscribers of NPS and such other schemes as approved by the authority from time to time.
    • Approving the schemes and laying down norms of investment guidelines under such schemes;
    • Registering and regulating intermediaries: NPS Trust, Points of Presence, Central Record-keeping Agency, Trustee Bank, Pension Funds, Custodian for time-bound service to subscribers.
    • Ensuring that the intermediation and other operational costs are economical and reasonable;
    • Making the existing grievance redressal process robust and time-bound.
    • Adjudication of disputes between intermediaries and between intermediaries and subscribers.

Key Facts about National Pension System (NPS)

  • NPS is a social security initiative by the Central Government.
  • This pension programme is open to employees from the public, private, and even unorganised sectors, except those from the armed forces.
  • The scheme encourages people to invest in a pension account at regular intervals during the course of their employment. After retirement, the subscribers can take out a certain percentage of the corpus. As an NPS account holder, people will receive the remaining amount as a monthly pension after your retirement. 
  • Earlier, the NPS scheme covered only Central Government employees. With effect from 1st May, 2009, NPS has been provided for all citizens of the country, including the unorganised sector workers, on a voluntary basis.
  • NPS is mandatorily applicable to Central Government employees; including Central Autonomous Bodies (except Armed Forces) recruited on or after 01.01.2004.
  • It is based on unique Permanent Retirement Account Number (PRAN) allotted to every subscriber.
  • The scheme is portable across jobs and locations, with tax benefits under Section 80C and Section 80CCD.

Q1) What is the Unified Payments Interface (UPI)?

UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank). It does so by merging several banking features, seamless fund routing & merchant payments into one hood. The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile platform. It was launched in 2016, by the National Payments Corporation of India (NPCI).

Source: PFRDA allows NPS subscribers to deposit contributions through UPI QR code